P14.6A. (LO 2, 3, 4 ) AP The ledger of Zug Limited at October 31,...
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Accounting
P14.6A.(LO 2, 3, 4 ) AP The ledger of Zug Limited at October 31, 2021, contains the following summary data:
Correct error from prior period; prepare statement of retained earnings.
Cash dividendscommon
$ 120,000
Operating expenses
$929,000
Common shares
650,000
Interest expense
54,000
Depreciation expense
87,000
Retained earnings, November 1, 2020
575,000
Service revenue
1,476,000
Your analysis reveals the following additional information:
1. The company has a 25% income tax rate.
2. On March 19, 2021, Zug discovered an error made in the previous fiscal year. A $57,000 payment of a note payable had been recorded as interest expense.
3. On April 10, 2021, common shares costing $75,000 were reacquired for $97,500. This is the first time the company has reacquired common shares.
Instructions
a. Prepare a journal entry to correct the prior period error.
b. Prepare the journal entry to record the reacquisition of common shares.
c. Calculate profit for the year ended October 31, 2021.
d. Prepare the statement of retained earnings for the company for the year ended October 31, 2021.
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